People with psychotic disorders and other serious mental illnesses, such as schizophrenia, bipolar disorder, and severe major depression, have high rates of co-occurring substance use disorder, which can wreak havoc in their lives. In this article the authors describe strategies for assessing substance use problems in people with serious mental illnesses, and then address the treatment of these co-occurring disorders. The authors review principles of treatment of co-occurring disorders, including integration of mental health and substance abuse services, adopting a low-stress and harm-reduction approach, enhancing motivation, using cognitive-behavioral therapy strategies to teach more effective interpersonal and coping skills, supporting functional recovery, and engaging the social network. The authors include a section on how social workers may play a key role in assessment, treatment, or referral for co-occurring disorders in a variety of settings. Throughout the article the authors emphasize that belief in the possibility of recovery from co-occurring disorders and instilling hope in clients, their family members, and other treatment providers, are vital to the effective treatment of co-occurring disorders.